Case Study Thirty-One Gifts

Company Background

Thirty-One Gifts is more than just a direct sales company to its nearly 64,000 independent sales consultants in the U.S. and Canada. Its stated mission is to empower, support and encourage women to run their own businesses as Thirty-One consultants. Women are given the tools to achieve financial freedom through a simple, easy and fun path full of rewarding experiences.

Founded by Cindy Monroe in 2003 in Chattanooga, Tennessee, Thirty-One Gifts is one of America's fastest-growing direct-sales companies. Thirty-One Gifts offers purses and wallets, totes, home décor and organization solutions, travel bags and accessories, jewelry and much more, most of which can be personalized with embroidery, laser etching and printing techniques.

The Challenge

Planning for a rapidly growing direct-selling business is a challenging task. “When we approached TXT Retail in 2013 we were facing a number of planning challenges,” explained Mike Mausteller, Director, Merchandise Planning & Control at Thirty-One Gifts. “We were a young company growing super-fast (in the range of 200% and 300% year over year); planning was done in Excel with obvious limitations. There was no ERP in place and our rapid rate of hiring meant we didn’t have the standard level of tacit knowledge of our markets or product assortments“.

Different from store-based operations, which have defined calendars and hours of operations, direct sales performance is dependent on the activity of independent consultants who are totally autonomous and whose schedules can vary from month to month. “This variability can create large swings in sales, making demand and inventory planning far from easy.” commented Mausteller.

“Also, brick and mortar retailers can have limited location testing for new products and with the resultant sales performance data they can refine their strategies and product selection. Here at Thirty-One Gifts, our catalog goes out in print and lives for 6 months. With the catalog, we are telling our customers that a product is available, that it is going to be there for the entire season, and that we sell it at a specific price. With this business model in place, we need accurate demand forecasting to get inventory right, provide optimal product availability and always satisfy our customers’ expectations”.

Thirty-One Gifts selected the TXT Retail solution with goals of increasing forecast accuracy and visibility across a growing business, controlling inventory and reducing the risk of product obsolescence.

Why TXT Retail

TXT Retail was selected for the flexibility of its solution and the expertise of the team. “We needed to better align our inventory strategies with demand to avoid backorders or costly air freight charges.” commented Mausteller. “We chose TXT Retail for their ability to support planning from end-to-end, as well as for the flexibility of the solution which is able to adapt to our evolving needs.”

The Solution

Thirty-One Gifts uses the TXT Retail Merchandise Lifecycle Management solution for pre-season target planning, open-to-buy, assortment planning and in-season inventory modeling management.
Prior to TXT Retail’s implementation, Thirty-One Gifts relied on spreadsheets with planning executed at month and style level. Now with support from the TXT Retail solution, users plan at a finer style/color/size level and with a weekly horizon. The solution also provides embedded performance management and dashboards which ensure greater transparency across the business, and ultimately support more accurate fact-based decisions.

The company adopted a phased approach to implementation which enabled quick wins and the ability to successfully handle change management at each step of the solution deployment.

According to Thirty-One Gifts, the use of TXT Retail, coupled with the company’s efforts in redesigning its processes, is bringing benefits in terms of:

• Increased visibility – The company eliminated all possible errors linked to managing spreadsheets, and data entry. Planners can now perform weekly analysis with full visibility of how different styles are performing, which products sell below forecasts and which styles are beating the plan and are at risk of stock out. SKU-level dashboards lead to action ensuring responsiveness to demand. Thanks to increased visibility, Thirty-One Gifts reported saving over 50% of air ship expenses with a double digit in-stock rate improvement.

• Improved service levels with less inventory - “Not only have we improved in-stock rates but we’ve done it with less inventory,” commented Mausteller. The solution applies a statistically driven and empirically proven method to calculate ideal inventory while monitoring its execution. An ideal inventory is calculated for each SKU based on dynamic parameters. Variances are highlighted in the inventory planning screens as well as dashboards. A control panel allows the user to adjust safety stock and target inventory levels: by SKUs (A, B, C, D) volume groups, product category, stage of life cycle or seasonal status and month.

• Increased forecast accuracy – Data normalization efforts provided a more accurate picture of demand. Through the TXT Retail solution, the company started to plan and review demand by attributes which help planners identify those attributes that ‘drive demand’ (e.g. ‘age of a product’: products that are new generate stronger demand) and those attributes which are ‘predictors of demand’ and can help planners in forecasting the demand of products with similar characteristics.

Deeper attribute-based analysis has helped the company plan its assortments more effectively. Planners are now able to identify gaps in assortments and fill those gaps with items that generate sales. Likewise, planners can support more informed buying decisions. Thanks to analysis of styles with similar traits, it is possible to generate more accurate forecasts, which is key to optimizing inventory.

• Inventory obsolescence reduction of 75% - “In season, we reduced both out-of-stock and over-stock. The reduction of over-stock, considering that we don’t support in-season liquidation strategies, meant great benefits in reducing product obsolescence. This is certainly the biggest win of the project,” concluded Mike Mausteller.

The TXT Retail solution has been embraced by Thirty-One Gifts for its intuitive Excel interface, advanced planning and reporting capabilities, and system flexibility; qualities that have enabled Thirty-One Gifts to evolve the use of the solution to meet the ever-changing needs of the company.

The TXT Solution

Results

Increased visibility

Increased forecast accuracy

Saving over 50% of air ship expenses with a double digit in-stock rate improvement

Inventory obsolescence reduction of 75%

Customers Speak

“The full planning team is using TXT Retail and they are really pleased with the system. The solution has helped standardize the process, with everyone working and thinking in a coordinated fashion. The tool embeds the sector best practices yet it is absolutely flexible. As a young company, we were able to effectively evolve the tool as we learned and evolved our processes.” Mike Mausteller, Director, Merchandise Planning & Control, Thirty-One Gifts